National Pension System Tax Saving and Wealth Creation

National Pension System Tax Saving, Wealth Creation and Nation Building.

1. Don’t Just Save Tax, Create Wealth !! National Pension System

2. About NPS National Pension System (NPS) is a voluntary, defined contribution retirement savings scheme designed to enable the subscribers to create future corpus through systematic savings during their working life.  Its administered and regulated by Pension Fund Regulatory and Development Authority (PFRDA). All citizens of India between age of 18 to 70 years can enter the investments and avail the benefits of NPS. 1 st January 2004- NPS was launched exclusively for Government employees. 1st May 2009- Opened for all citizens under “All Citizen Model”. December 2011- Corporate Sector Model was launched

3. Types of NPS Accounts Contribution made through Company/Employer from 10% of your basic + D.A is termed as “Employer Contribution.” Contribution made by self is termed as “Voluntary Contribution of basic + D.A . 2% mandatorily Note- In FCI, we are opening only tier 1 account , Tier 2 can be activated by subscriber at later stage. Further, there is no Minimum Contribution for account opening.

4. Tax Benefits on Investments Types of Contribution Tax Benefit Cap on Tax Benefit Voluntary contribution over and above 80CCD (1) Additional deduction for NPS contribution beyond Rs 1.5 lacs Sec 80CCD 1(B) Rs 50,000 tax benefit, but no limit on contribution   Employer Contribution over and above 80C (Also applicable to NEW TAX REGIME) Tax deduction up to 10% of salary (Basic + DA) by employer, beyond Rs 2 lacs ( 1,50,000 Norma l 80c + 50000 Employee Contribution u/s 80ccd(1b)) Sec 80CCD(2) N/A

5. Choice of Pension Fund Managers A subscriber is free to select a PFM of his choice and it can be changed once in a Financial Year by employee themself. Aditya Birla Sun Life Pension Management Ltd. HDFC Pension Management Company Limited ICICI Prudential Pension Funds Management Company Limited Kotak Mahindra Pension Fund Limited LIC Pension Fund Limited SBI Pension Funds Pvt. Ltd UTI Retirement Solutions Limited Click here to check the latest PFM performance http://www.npstrust.org.in/return-of-nps-scheme

6. Investment in Asset Classes Similar to Mutual funds, under the NPS, individual savings are pooled in to a pension fund which are invested in to diversified asset classes. NPS investments are subject to market risks. The NAVs of the schemes may go up or down depending upon the factors and forces affecting the securities market.

7. Active Choice- Do It Yourself This is an option to choose yourself - the ratio in which your contributions will be invested among various asset classes. You have to provide Asset Class and Percentage allocation to be done in each scheme of the PFM. Subscriber can select multiple Asset Class under a single PFM Percentage contribution cannot exceed 75% for Equity and 5% for Alternative Investment Funds & depends on life cycle matrix after 50 years of age

8. Auto Choice- Pick ‘n’ Choose Best option for a Subscriber who wants to “ automatically” reduce exposure from risky investment options as they get older. The proportion of funds invested across asset classes will be determined by a pre-defined portfolio which will change as per age of Subscriber. As age increases, the individual’s exposure to Equity tends to decrease. Depending upon the risk appetite, there are three different options available within ‘Auto Choice’. Investments in Alternative Investment is not applicable in Auto Choice.

9. Partial Withdrawals Partial withdrawals are allowed on completion of 3rd Year in NPS Maximum of 25% can be taken three times during the entire tenure as Tax Free with a gap of three years between each withdrawal. Accessible to the total amount invested as Voluntary Contributions only, Employer Contribution cannot be withdrawn before retirement or separation as applicable. Withdrawal is allowed Subject to conditions- Children higher education Marriage of Children Purchase /construction of house Critical illness (including Covid 19) Disability of more than 75% Skill Development or re-skilling any other self-development activities Establishment of own venture or start up.

10. Pre- mature Exit Premature exit from NPS is allowed before attaining the age of 60 — provided they remained with NPS for 5years. At least 80% of the accumulated wealth ( Employer & Employee contribution both) must be utilized for purchase of an Annuity which will be effected after attaining the age of 60 years. The balance 20% is paid as a lump sum to the Subscriber – Tax Free. In case the total corpus in the account is less than or equal to Rs . 2.5 lakh, the Subscriber can avail the option of complete withdrawal.

11. Maturity and Superannuation Up to 60% of the total corpus can be withdrawn as lump sum and Tax Free. Minimum 40% must be used for buying annuities from an approved ASP. 100% Withdrawal is allowed if the corpus value less is than or equal to Rs. 5 lakhs. Can extend investment up to age of 7 5 years. Fresh contributions are allowed during such a period of deferment .

12. Withdrawal In case of Death Before Maturity Nominee/ Legal Heir can withdraw the 100% of corpus. After Maturity Nominee / Legal heir would receive the proceeds as per the selected annuity plan (pension).

13. Annuity Service Providers HDFC Life Insurance Co. Ltd ICICI Prudential Life Insurance Co. Ltd India First Life Insurance Co. Ltd Kotak Mahindra Life Insurance Co. Ltd Life Insurance Corporation Of India SBI Life Insurance Co. Ltd Star Union Dai-ichi Life Insurance Co. Ltd Canara HSBC OBC Life Co. Ltd Max Life Insurance Co. Ltd Bajaj Allianz Life Insurance Co. Ltd TATA AIA Insurance Co. Ltd Annuity Service Providers (ASPs) are be appointed by PFRDA to maintain the annuity contribution of subscribers through their various schemes and they are responsible for delivering a regular pension (annuity) to the subscriber post maturity. Below are the 11 ASPs. Click here to check the Annuity Quotes https://cra-nsdl.com/CRAOnline/aspQuote.html

14. Account Opening and Shifting Process New Account Opening Click- https://mynps.nsdl.com/myNPS/NationalPensionSystem.html?appType=main&authId=ZTZHWXZWVDRPcFNtYXJWRnNGeEx3QT09 You need - Update Mobile Number linked to UID Jpeg image of PAN card Jpeg image of specimen signature Jpeg image of Cancelled cheque/ Bank Statement containing Account No., IFSC and MICR Once PRAN is generated, Subscriber receives the intimation via Email and SMS. Subscriber also gets PRAN kit from NSDL CRA within 30 days of PRAN generation. Mapping / Shifting of an Existing PRAN Kindly raise a request to your Nodal Officer (HR Team) with below details Full Name Employee Code PRAN Date of Joining Date of Retirement Date of Birth

15. Fees and Charges (excludes applicable taxes) Intermediary Charge head Service Charge Mode of Deduction POP_HDFC Securities Initial Subscriber Registration Rs . 200 Collected upfront from the first contribution Initial Contribution Rs.30 All subsequent Contributions Any Non- Financial Transaction Rs . 30 CRA-NSDL Charges PRA Opening charges CRA charges for account opening if the subscriber opts for Physical PRAN card Rs . 40 Collected through NAV cancellation/ Deduction CRA charges for account opening if the subscriber opts for ePRAN card - Welcome kit sent in physical Rs . 35 CRA charges for account opening if the subscriber opts for ePRAN card - Welcome kit sent vide email only Rs . 18 Annual PRA Maintenance cost per account Rs . 69 Charge per transaction Rs . 3.75 Custodian SHCIL Asset Servicing (Per Annum) 0.0032% PFM Investment Management (Per Annum) Maximum Cap by PFRDA is 0.01% pa NPS Trust For Managing Expenditure 0.005% of the fund value

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